More and more colorful drive-up espresso stands dot Division Street, freckle Francis, and mark Maple.


The little shops, which also are scattered along Sprague, tucked away on Trent, and built on other busy thoroughfares, have been popping up for a decade, and coffee industry observers believe theyll continue to make their sudden, streetside appearances.


I thought the drive-through espresso business had reached its peak three or four years ago, but it still has the capability to grow, says Bill Olmstead, a partner in RSI Specialty Food Equipment, a Spokane company that sells espresso machines and other equipment.


The signs that the industry still is going through a buildup are abundant:


Currently, RSI is working with coffee entrepreneurs who are planning to open three more of the java stops here.


A county building technician says the county has just issued a building permit for a fourth espresso drive-up, and a fifth is still in the review process.


The most common inquiries the Spokane Regional Health District gets from potential business owners involve questions about starting espresso stands.


Earl Ennis, co-owner of Brews Bros. Inc., and Roy McHaney, co-owner of The Supreme Bean, both are looking for new locations for shops where they can fill up your cup.


While some food-fad businesses, such as frozen yogurt shops, have faded, espresso stands have been going strong for more than 10 years here and more than a decade longer in the Seattle area, Olmstead says.


I dont see this as a fad, he says.


Neither does Seattle-based coffee giant Starbucks Corp., which opened 612 stores during its most recent fiscal year, which ended Oct. 3, 1999, to give it a total of nearly 2,500 outlets in 13 countries.


This year, Starbucks expects to open another 750 stores worldwide, including more than 100 under a licensing agreement with Albertsons Inc., the Boise-based grocery chain. Theres one such Starbucks outlet in a new Albertsons supermarket in the Spokane Valley.


Starbucks has enjoyed booming coffee salesits revenues were nearly $1.7 billion in its last fiscal year, up from $1.3 billion the year earlierwhile moving into premium teas, a literary magazine, Internet sites, music compilations, and even a chain of music stores.


The Seattle company opened its first Spokane location in February 1993 and now has nine outlets here. The market there has been successful. Weve been very well-received by Spokane customers, says Chris Gimbl, a Seattle-based Starbucks spokesman.


Still, while the coffee business seems to do nothing but growto the specialty coffee industry, a shakeout apparently is skimming the froth off a fresh lattesome in the industry doubt whether it can keep growing here as fast as it has.


I see a little more growth still, but I think weve seen the biggest surge of growth already, Ennis says.


I dont think they can keep popping up, Simon Craven-Thompson, co-owner of Spokane coffee roaster Cravens Coffee Co., says of the java stops. But every time I think all the great locations are taken, another one opens and takes off.


In the Spokane area, as residential and commercial development stretch outward and traffic patterns intensify in new areas, new hot spots for drive-through espresso stands emerge, Olmstead says. The owner of each stand wants his or her java stop to be the first one coffee cravers see on their way to work in the morning, so some of the hottest locations are on Spokanes periphery, such as in the Mead area and the Spokane Valley, he says.


A better cup of coffee


Espresso stands here are getting better as well as more numerous, assert coffee-industry sources. Stands are bigger and more attractive, and the coffee is of higher quality than just a few years ago, they contend.


Its phenomenal to see how fast the standards are improving, says Craven-Thompson. He says that hes been many places where specialty coffees arent made as well as they are at shops here, and coffee drinkers elsewhere dont demand the same level of quality that they do in Spokane. He contends that once consumers have developed discriminating tastes for specialty coffees, they seldom go back to a plain cup of joe brewed from canned commercial-brand grounds.


If you look at the coffee market itself, the number of coffee drinkers isnt increasing, but specialty coffees are becoming a larger share of the market, says Starbucks Gimbl. He credits general prosperity in part for the boom, and notes that using specialty beans and grinds is a simple way to add something special to a daily routine.


Craven-Thompson also points out that fine coffee is an affordable luxury. He says the best coffee in the world costs only about 12 cents a cup to brew at home, while luxury beverages such as fine wines are far more costly. Canned grounds from the supermarket brew a cup at a cost of about 4 cents.


Craven-Thompson says most coffee roasters sell espresso beans for between $5.50 and $8.50 a poundeither wholesale or retailand a pound of such beans can brew about 60 shots of espresso. The average retail price for a coffee drink at an espresso stand here is $2.25, he says.


At a wholesale price of $5.14 per pound for coffee beans, a brewer will have 9 cents in cost in a single shot of espresso, and an additional 6 cents in cost in the cup, lid, and napkin that go with the drink, says Crossroads Espresso, a Eugene, Ore.-based vendor of specialty coffee-making equipment. A cappuccinoa coffee with a layer of milk foam atop itwould cost 27 cents for the coffee, milk, cup, and napkin; a latte would cost 33 cents, and a mocha would cost 37 cents, Crossroads Espresso claims.


Such small materials costs potentially give a single cup of specialty coffee a healthy profit margin, and selling 300 drinks a day gives an espresso stand a yearly gross profit potential of $162,000, Crossroads Espresso claims. From that figure, however, a coffee entrepreneur also would have to subtract such significant overhead costs as labor, taxes, facility costs, and debt service on equipment.


Java-shop owners here, however, say their costs exceed the levels cited by Crossroads Espresso. The Eugene company bases its profit-potential numbers on an average retail price of $1.61 a cup and says that its cost and price estimates were calculated several years ago and are on the conservative side.


At successful espresso stands here, fresh lemonade, shakes, smoothies, and Italian ices round out the menus, RSIs Olmstead says. To bolster its own revenues from the espresso market, RSI sells the equipment to make such cold drinks.


A high volume of customers is a key to a stands success, because the cost to open an espresso stand is similar in most locations here, says McHaney.


In March 1994, when he was 24, McHaney and his father opened the first of The Supreme Beans two locations, at 2115 N. Hamilton, near Gonzaga University. Two years later, they opened a second location, at 3101 N. Argonne, in Millwood, and they now are looking for a location for a third stand they hope to open this year. McHaney says The Supreme Bean wants a site that has the visibility and accessibility needed to draw a high volume of customers, but such locations also are attractive to other retail businesses, and many landowners dont want to dedicate prime corner lots to tiny espresso stands.


Getting started


The investment required to open an espresso stand has increased over the last decade, say McHaney and others.


In the early 1990s, an espresso stand could be built on an empty corner and equipped for a total outlay of between $12,000 and $15,000, but those days are gone, says RSIs Olmstead. Estimates now place the cost to open such a stand at between $65,000 and $100,000.


The range of dollars is really all over the place, because it depends on whats there already, Olmstead says.


Remodeling and equipping a building, such as a former drive-through bank branch, costs about $35,000, while building and equipping a new structureand putting in utilities, paving, and landscapingcan push costs near $100,000, he says. Somewhere in between those extremes falls the average cost to build a stand in another businesss parking lot, for which rent then must be paid.


A commercial espresso machine costs between $6,000 and $10,000, and expanding the menu to include other types of drinks besides coffee requires additional equipment, Olmstead says.


Espresso stands that are larger than 120 square feet must meet the same requirements as other commercial structures, including having van-accessible off-street parking for handicapped people and other accessibility standards, says Julie Shatto, lead building technician at Spokane Countys division of building and code enforcement. The city of Spokane says its requirements are similar.


Before 1995, county building officials regarded espresso stands as temporary structures and allowed them to use holding tanks for sewage and water. The county later applied more stringent standards when it became apparent the stands were a permanent fixture.


Now, espresso stands must be connected to water and sewer systems to get the limited-restaurant permit they need to operate, says Pam Heeter, food programs supervisor at Spokane County Health District.


The health district also reviews a stands equipment layout and ensures that all equipment meets National Sanitation Foundation standards for commercial kitchen gear. In addition, before issuing a limited-restaurant permit, the health district reviews menus and food-preparation sheets that outline how each menu item will be prepared.


In an additional regulatory step, Washington state requires each espresso-stand employee to attend a class and pass a test to be certified as a food- and beverage-handler.


An espresso stand worker must know his or her way around coffee-brewing equipment, pay attention to detail, be a quick thinker, and love coffee, McHaney says. He has trained each of Supreme Beans employeesthe business now has 11 workersand estimates that it takes about six months of brewing java drinks full time to get good at the job.


There are so many variables, he says. The Supreme Beans stands offer three varieties of coffee, four kinds of milk, 70 flavors of syrup, and five sizes of cups. A worker has to sort through those options quicklyand correctlyand present a drink with a smile to get the customer in the idling car back on the road.


Attention to the details that produce a consistently good drink are vital, say stand owners.


If you pay three bucks for a cup of coffee, you dont want the luck of the draw. You want to know youll always get the drink you ordermade right, says Kay Penna, who launched JitterBeanz Espresso LLC about 17 months ago and still operates the companys sole java stop at 6702 N. Country Homes Boulevard.


As regulations tighten and costs climb, the type of people opening espresso stands also has changed, says Olmstead.


When stands first started popping up, they often were part of get-rich-quick schemes dreamed up by people with little business experience, he says. Now, opening a new stand is more likely to be a career move by someone who is knowledgeable and serious about business.


RSI has helped equip stands owned by retirees, people who wanted to escape 8-to-5 jobs, and young people, who often have had the financial backing of their parents, Olmstead says. He says only a few owners operate espresso stands as a sidelight to another career.


A lot of espresso-stand owners are people who wouldnt own their own business otherwise, Craven-Thompson says. Its still very affordable, and they dont have to risk a large amount of assets.


Hadriana McIntosh opened CoffeeWorks in a former bank drive-through at 2320 E. Sprague in 1998 with a small nest egg she wanted to invest in a business of her own. As a favor, her boyfriend, who had worked at an espresso stand, taught her how to make coffee drinks. She is the shops sole proprietor and only employee.


RSI supplied the equipment for CoffeeWorks, assisted with the design of the remodeling project for the shop, and helped McIntosh get financing from U.S. Bank for the $35,000 project, she says.


Business at CoffeeWorks started out slow, but picked up last summer with strong sales of fruit smoothies and Jet Tea, a frozen drink made with tea and fruit juice. Now, business is steady, though McIntosh declines to disclose revenues.


I have my own labor, a lot of sweat, in this investment, she says.


Coffee entrepreneurs get returns for their efforts. McHaney says The Supreme Bean provides him with a comfortable income and a flexible schedule, with free time to spend with his three children. JitterBeanzs stand is close to Pennas house so she can get home easily to be with her kids after school, she says.


Coffee-stand owners also enjoy warm relationships with their customers.


I enjoy the customers and the chance to mingle with the public, says Ennis, co-owner of Brews Bros., at 101 W. Francis. You meet people from all varieties of life and learn a lot about them.


Ennis also learned about all sorts of people in his previous career as a homicide detective with the Spokane Police Department, but this is a whole different way of life, he says.


Ennis and his partner, John Sullivan, who also recently retired from the Spokane Police Department, were looking to supplement their retirement incomes when they started Brews Bros. about two and a half years ago.


He says the roughly 300-square-foot stand sells between 300 and 425 drinks each day. Brews Bros. has eight part-time employees, all of whom are high school and college students. While the young employees make the drinks and staff the stands two order windows, Ennis delivers orders to customers who call in their selections.


About nine months ago, Brews Bros. sold a franchise to a woman in Colville who wanted to open a coffeehouse in that northeast Washington town, Ennis says. Now, the company is looking for another location of its own and is considering either another drive-through location or a site that would include indoor seating for customers plus a drive-up window, he says.